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Why Export to Mexico?

With the second largest economy in Latin America and an attractive emerging market, Mexico has kept a strong economic relationship with the United States since the signing of the North American Free Trade Agreement (NAFTA) in 1994. Mexican economy has shown to be booming in recent decades as it has become the 13th largest exporter in the world. According to CIA World Factbook, “Mexico has become the US’ second-largest export market and third-largest source of imports. In 2017, two-way trade in goods and services exceeded $623 billion. Mexico has free trade agreements with 46 countries, putting more than 90% of its trade under free trade agreements.”

In the automotive industry, Mexico’s position has remained strong as it contributes to more than 3% of the country’s GDP. Only 10 years ago, Mexico manufactured 17% of the region’s heavy vehicles; by 2016, it produced 35% placing the automobile industry as pillar for the country’s economy. By 2020, the Mexican automotive sector is expected to produce close to 5 million light vehicles from 13 different brands in more than 30 manufacturing plants. (ProMexico)

With more free trade agreements than any other country in the world, Mexico is also a member of world organizations and forums such as the World Trade Organization (WTO), Asia-Pacific Economic Cooperation (APEC), the G-20, and the Organization for Economic Cooperation and Development (OECD). (ITA)

So, where’s the opportunity? In a recent Bloomberg analysis, Mexico and Turkey came out as the most attractive markets for 2018. According to the study, these two countries scored higher because “their real effective exchange rates are more competitive than the average of the past 10 years.” In terms of opportunities, studies such as this talk about a globally competitive country where international trade represents a big percentage of its economy. Just take a look at Mexico’s top 10 exports:

  1. Vehicles: US$101.7 billion
  2. Electrical machinery, equipment: $81.6 billion
  3. Machinery including computers: $65.9 billion
  4. Mineral fuels including oil: $22.6 billion
  5. Optical, technical, medical apparatus: $17.5 billion
  6. Furniture, bedding, lighting, signs, prefab buildings: $10.7 billion
  7. Plastics, plastic articles: $9 billion
  8. Gems, precious metals: $7 billion
  9. Vegetables: $6.7 billion
  10. Fruits, nuts: $6.6 billion

Source: World’s Top Exports

 

Considering a series of factors such as Mexico’s diversified market, stable economic growth and as well as proximity with the U.S. and South America, there is no doubt that Mexico is a country with great opportunity for all kinds of exporting companies. As (ITA) describes the key reasons why U.S. companies should consider exporting to Mexico, “U.S. exporters who do business with Mexico also benefit from a well-developed supply chain that is closely integrated with the U.S.”

Whether you are looking to start business with Mexico or expand it, you must know that the most common forms of operation in Mexico are supply chain operations, representative offices and joint ventures. By getting to know the facts and figures related to Mexico’s market as an engaging opportunity for international trade, it is possible for your business to analyze and determine the advantages of selling goods and services in Mexico.

 

 

Sources:

Central Intelligence Agency (2018, October 17) The World Factbook: North America: Mexico. Retrieved from: https://www.cia.gov/library/publications/the-world-factbook/geos/mx.html

Amadeo, K. The Balance. (2018, October 11) Mexico’s Economy facts, Opportunities, and Challenges. Retrieved from: https://www.thebalance.com/mexico-s-economy-facts-opportunites-challenges-3306351

Government of U.K.’s Department of International Trade. (2016, May 10) Doing business in Mexico: Mexico trade and export guide. Retrieved from: https://www.gov.uk/government/publications/exporting-to-mexico/exporting-to-mexico

The International Trade Administration (ITA) (2018, December 10) Exporting to Mexico – Market Overview. Retrieved from: https://www.export.gov/article?id=Mexico-Market-Overview

ProMéxico (2016, October) La industria automotriz mexicana: situación actual, retos y oportunidades. Retrieved from: http://www.promexico.mx/documentos/biblioteca/industria-automotriz-mexicana.pdf

Workman, D. (2018, September 14) World’s Top Exports. Mexico’s Top 10 Exports. Retrieved from: http://www.worldstopexports.com/mexicos-top-exports/